Schedule 1 Economic Development Sub-Committee EDS 2019-316 1 LAKE SIMCOE REGIONAL AIRPORT ECONOMIC IMPACT STUDY MAY 2019 – FINAL REPORT Schedule 1 Economic Development Sub-Committee EDS 2019-316 2 Executive Summary Lake Simcoe Regional Airport (CYLS) began operations in 1991 with a 3,500 ft. runway and a small apron located north of the runway. The airport was expanded in 1993 with the lengthening of the runway to 5,000 ft. and the addition of a terminal building. Subsequent developments brought the runway to its current length of 6,000 ft. and added further support services and infrastructure to the airport. From that simple beginning, CYLS has developed into a regional airport facility that significantly contributes to the economies of the City of Barrie, Simcoe County, and the Province of Ontario. The airport supports area businesses’ ongoing operations and development activities by providing access to air travel facilities and infrastructure for general aviation and corporate jet aircraft. Globally, commercial and general aviation are major economic generators. Air transportation facilitates business in other sectors of the economy. Through the connectivity provided, airports facilitate employment and economic development in the national economy through trade of goods and services, investment, tourism, education and increased productivity. This study quantifies the economic impacts generated by CYLS’ 2018 operations and development activities. The report also examines the airport’s potential future impacts, considering the proposed runway expansion and related projects that were announced in July 2018. These projects have been endorsed, in principal, by the airport’s shareholders. This potential expansion is proposed in response to increases in the region’s population, economic activity, and demand for air travel. Any expansion at CYLS would be incremental and phased in gradually on a demand-driven basis. Furthermore, in early 2017 the Southern Ontario Airport Network (SOAN) was launched and CYLS was identified as one of 11 of Southern Ontario’s key airports. SOAN was developed so these selected airports in the region could collectively accommodate future travel demand. Economic impact is a measure of the spending and employment associated with a sector of the economy, a specific project, or a change in government policy or regulation. For this study, economic impact refers to the economic contribution associated with the ongoing activities at Lake Simcoe Regional Airport on the surrounding local region and beyond. The airport is an economic generator. Its 2018 operations supported 100 direct jobs with wages of over $8 million. Furthermore, nearly $12 million in Gross Domestic Product (GDP) and roughly $33 million in economic output were generated. Including indirect and induced impacts, CYLS generated a total of 236 jobs and over $16 million in total wages throughout the region in 2018. Total GDP and total economic output are estimated to be $26 million and nearly $61 million respectively. These impacts drive the economies of the City of Barrie, Simcoe County, and the Province of Ontario. The 2018 economic impact of Lake Simcoe Regional Airport includes 100 direct jobs of employment and over $8 million in direct wages. The airport’s operations also created nearly $12 million in GDP and nearly $33 million in direct economic output. Lake Simcoe Regional Airport (CYLS) – 2018 Economic Impact Study – FINAL REPORT i Schedule 1 Economic Development Sub-Committee EDS 2019-316 3 Background on Economic Impact Economic impact can be measured along several dimensions. The most common are: 1. Employment – expressed either in terms of jobs or “person years of employment.” Because many jobs may be only part-time or seasonal, the number of jobs is greater than the number of person years of employment. 2. Wages – includes wages, salaries, and benefits associated with employment tied to the airport. 3. Gross Domestic Product (GDP) – sometimes referred to as Value Added, this is a measure of the dollar value of final goods and services produced because of economic activity. 4. Economic output – the dollar value of industrial output produced. Sometimes referred to as “economic activity,” it reflects the spending (e.g., capital improvement plus revenue) by firms, organizations, and individuals. Economic impact is comprised of three components - direct, indirect and induced impacts. Together, they provide a snapshot of the airport’s impact on the local and provincial economy. Direct economic impact measures the employment and other impacts directly associated with the airport. This includes employment of all tenants located on airport land, subtenants and relevant firms that are located off airport. Indirect impacts are those associated with supplier industries that exist because of the direct impacts. For an airport, indirect impacts originate from off-site firms that supply goods or services to airport users. Induced impacts are those created by the spending of wages, salaries, and profits earned during the direct and indirect economic activities. Together, the indirect and induced impacts are often referred to as “multiplier impacts.” Total impacts are calculated by adding together the direct, indirect and induced impacts. This report emphasises the direct economic impacts, as these are based on information provided directly by businesses that responded to the employment survey and are clearly identifiable. The indirect and induced impacts are modeled based on economic multipliers and ratios from Statistics Canada for the Province of Ontario.1 All economic impacts discussed in this analysis are based on operations and employment at CYLS in 2018. 1 The indirect and induced economic impacts and direct GDP and direct economic output are calculated using the latest available Statistics Canada multipliers ratios for the Province of Ontario (2014), adjusted for inflation. Multiplier impacts must be interpreted with caution since they may be illusory when the economy experiences high employment and output near industry capacity. Lake Simcoe Regional Airport (CYLS) – 2018 Economic Impact Study – FINAL REPORT ii Schedule 1 Economic Development Sub-Committee EDS 2019-316 4 Economic Impacts of the Airport’s Operations The direct impacts of CYLS in 2018 are estimated to be 100 jobs, earning approximately $8.4 million in wages, generating $11.8 million in GDP and $32.9 million in economic output, as shown in Figure ES-1. Including indirect and induced impacts, the total economic impacts of CYLS includes 236 jobs that paid employees $16.1 million in wages. Furthermore, CYLS’s operations contributed an estimated $26.0 million and $60.6 million in total GDP and total economic output, respectively, to the provincial economy. Figure ES-1: Annual Ongoing Economic Impact of CYLS in Ontario, 2018 Economic Employment Wages GDP Impact Output (Jobs) ($ Millions) ($ Millions) ($ Millions) Direct 100 $8.4 $11.8 $32.9 Indirect 89 $5.4 $9.4 $19.4 Induced 47 $2.3 $4.9 $8.4 Total Ontario 236 $16.1 $26.0 $60.6 Note: Totals may not sum due to rounding. Beyond the direct, indirect and induced economic impacts, CYLS contributes other positive effects to the region that can be more difficult to quantify. The airport facilitates employment and economic development in the regional economy through increased trade, attracting new businesses to the region and encouraging investment. It supports long-term economic growth by linking the regional and national economy through increased employment, improved connections to business markets, and greater access to resources. In addition, CYLS’ support of Georgian College’s Aviation Institute’s Aviation Management and Training Programs helps to build knowledge, skills and human capital in the industry. The daily activities of large employers such as the Ontario Provincial Police (OPP), Canadian Forces Base Borden and nearby health centres benefit considerably from the strategic location and presence of CYLS, which acts as a gateway to other business geographies and streamlines operations. This yields additional benefits to direct users and generates further positive impact on the performance and economic activity of the City of Barrie, Simcoe County and beyond. Lake Simcoe Regional Airport (CYLS) – 2018 Economic Impact Study – FINAL REPORT iii Schedule 1 Economic Development Sub-Committee EDS 2019-316 5 Annual Tax Contributions Lake Simcoe Regional Airport is also an important generator of tax revenues to all levels of government. In 2018, the airport’s employers and employees paid an estimated $3.1 million in taxes to federal, provincial, and municipal governments. Two-thirds of those taxes were paid to the federal government, while the provincial government received nearly 29% of estimated tax revenues. The municipal government received approximately $145,000 in property taxes. See Figure ES-2 below. Figure ES-2: Annual Estimated Tax Revenues of CYLS, 2018 Federal Prov $2.1M $3.1M $0.9M 66.8% Total Taxes 28.6% Municipal $145,000 4.6% Note: (1) Taxation impacts are based on 2017 tax rates. (2) Municipal tax impacts reflect the latest information available (i.e., contributions made in 2018). Lake Simcoe Regional Airport (CYLS) – 2018 Economic Impact Study – FINAL REPORT iv Schedule 1 Economic Development Sub-Committee EDS 2019-316 6 Potential Future Growth of Lake Simcoe Regional Airport Lake Simcoe Regional Airport is a driver of economic “The County of Simcoe views the development in the local region and in the Province of airport